A whistleblower exposed roughly 11.5 million documents of the Panamanian law firm, Mossack Fonseca. In 2014, an anonymous whistleblower contacted Bastian Obermayer, a reporter working for one of the largest newspapers in Germany, Süddeutsche Zeitung. He said that he was prepared to leak highly confidential data, the amount of which was “more than anything you have ever seen”. The now-called Panama Papers included information about government business leaders in Turkey using shell companies, a network of offshore companies controlled by those in Putin's innermost circle, and information about shell companies used by Syrian elites in a variety of ways to evade international sanctions, and much more.
With his life in danger, the anonymous whistleblower made sure all communications between him and the reporter remained in encrypted channels. Some of the secure messaging apps and encrypted emails used between the whistleblower and Obermayer were Signal and Threema. They made sure that the history of their exchanges was deleted. These exchanges resulted in a staggering transfer of 2.6 terabytes of data, tracking billions of dollars over almost 40 years from the Panamanian law firm, Mossack Fonseca.
These documents included information about more than 210,000 companies in 21 offshore jurisdictions. The Panama Papers shed light on the movement of money through shell companies in a variety of countries, implicating world leaders, celebrities, star athletes, and businesses around the world. Some of the copies of contracts, bank transactions, and emails showed how the firm had sold and serviced anonymous offshore companies owned by those from Panama to those from places like Hong Kong. Other documents exposed that Mossack Fonseca worked with hundreds of banks, law firms, company incorporators, and other middlemen to set up companies, foundations, and trusts for corrupt clients.
What did all of these jurisdictions known for off-shore tax evasion vehicles have in common? In everyone, it was very easy to set up a company without having to disclose the identity of the real individuals behind it. Authorities in these countries neither recorded this information nor asked questions. Although, these shell companies are not illegal per se, these documents exposed how they are often used to carry out a wide array of serious financial crimes that go beyond evading taxes. This offshore world also harbors criminals who launder the proceeds of corruption, drug cartels, human trafficking, and even global terrorism.
The Panama Papers whistleblower explained that his motivation behind this exposure was to shine light on and reveal the injustices perpetrated by the off-shore tax haven industry. He believed that law firms like Mossack Fonseca cause serious harm to the world and wanted to end it. “Income inequality is one of the defining issues of our times, it affects us all over the world,” he said. Thanks to the Panama Papers' whistleblower's actions, a new global debate has been sparked about offshore tax havens. The lives of some whistleblowers and activists often get destroyed and sometimes even lead to criminal prosecution, like in Edward Snowden's case, and there are plenty of more examples. This is why it is important to have whistleblower legal counsel when exposing the wrongdoings of powerful people.
The Panama Papers have sparked further interest by the European Commission, the British Parliament, the United States Congress, and many other nations to act not only to protect whistleblowers but to put an end to the global abuse of corporate registers and offshore tax-havens. This whistleblower's actions have led to people all around the world asking governments to end financial secrecy and to fight institutional corruption.
Since the Panama Papers came out, more countries have been moving towards collecting information about the true owners of anonymous companies. For example, in 2018, the former Prime Minister of Pakistan, Nawaz Sharif, was sentenced to 10 years in prison and fined $10.6 million dollars on corruption charges following revelations that his children were linked to offshore companies that owned luxury apartments in London. By 2019, the Panama Papers' data on the true owners of the shell companies has helped governments recover over $1.2 billion through seizures, fines, and penalties.
While there are some signs of progress, the pace of reform is much too slow given the urgency of this issue. Offshore company formation is a lucrative business, seen by many countries and territories as an important source of revenue. Especially, in times of global health and economic crises, the need for public assets to be available for the common good has become blindingly obvious. Like what the Panama Papers' whistleblower encouraged governments and agencies to do, we need more legal protections for whistleblowers and even more incentives for whistleblowers to come forward, regardless of where they are located. If you have information about wrongdoing involving offshore tax evasion or business or government corruption, don't hesitate to contact us at Whistleblowers International.